Biosimilars market in Europe provides insights to U.S.

When it comes to laws and regulations, what happens in Europe stays in Europe generally, and doesn’t have much bearing on the United States. But a recent win in Europe for U.S. drug maker Hospira could have some implications for the United States as well.

Last month, the company — which specializes in making generic injectable drugs — announced that European Union regulators had approved the continent’s first biosimilar monoclonal antibody.

Biosimilars have been on the market in Europe for several years now, but what’s significant about the approval of Hospira’s Inflectra (infliximab) — a biosimilar version of Merck’s and Johnson & Johnson’s Remicade — is that it marks a big move up the value chain. Monoclonal antibodies, so called because they are produced within genetically manipulated cells that are all clones and part of a single cell line, are considered more difficult to make than other biotech drugs, such as growth hormones and interferons.

The United States, of course, is far behind Europe in the maturity of its biosimilars market. The only biosimilar available here so far is Sandoz’ growth hormone treatment Omnitripe (somatropin [rDNA origin]), a biosimilar version of Pfizer’s Genotropin. That received Food and Drug Administration approval in 2006 under a special, one-off approval pathway. Other than that, the Patient Protection and Affordable Care Act of 2010 contained provisions for an abbreviated approval pathway for biosimilars, though the FDA still has to finish putting together regulations, a process that experts expect to take a few more years.

But regardless of regulatory differences between the United States and Europe, the ability to market biosimilars over there provides important experience for their future marketing over here. By the time the FDA is ready to start looking at abbreviated biologic license applications here, for example, Inflectra possibly will have been on the market in Europe for several years, thus providing significant amounts of clinical data, not to mention the many years’ worth of clinical data for biosimilars already on the market in Europe.

Another potential use of those clinical data is that they might quell some of the concerns about the safety and equivalency of biosimilars that have popped up in the United States lately.

In August, California’s state legislature passed SB 598, a bill that would limit the ability of pharmacists to substitute biosimilars for branded biologics — one of several such bills that have seen mixed fortunes in state legislatures around the country. But the Food and Drug Administration has criticized such bills, saying they undermine trust in biosimilars. According to published reports, an FDA spokeswoman said “efforts to undermine trust in these products” were cause for worry and did not serve patients’ interests.

For the Food and Drug Administration’s Office of Generic Drugs, one of the biggest stumbling blocks has been its significant backlog of generic drug approval applications. But it’s steadily making progress in addressing the problem.

When Congress approved a reauthorization of the Prescription Drug User Fee Act that included the Generic Drug User Fee Amendments last year, that backlog included about 2,500 applications. But thanks to GDUFA, the agency has managed to clear muchof it.

As of last month, more than 40% of the backlog applications had been reviewed, according to the FDA, which had collected more than $255 million in user fees to finance the program. Also last month, the agency announced that it exceeded its staff-hiring goals, having hired 234 new workers, three more than the 231 planned. In total, it hopes to hire 921 in a three-year push, including 461 people during fiscal year 2014.

“I am extremely happy with this accomplishment,” Center for Drug Evaluation and Research director Janet Woodcock wrote in a memo to FDA staffers. “As hiring continues through the end of this fiscal year, planning has already begun for next fiscal year.”

The Generic Pharmaceutical Association greeted the news with excitement. “Making these hiring decisions is an important step to achieve the goal of [the Generic Drug User Fee Amendments] and address the delays that reduce Americans’ access to affordable medicines,” GPhA president and CEO Ralph Neas said. “The FDA has a critical task at hand: reducing the backlog in applications for new generic medicines and speeding the average [abbreviated new drug application] approval time.”

For fiscal year 2014, the agency hopes to conduct post-market evaluation of generic drugs that will include research into surveillance and monitoring methods for them while gauging patients’ perceptions of generic drug quality and effectiveness. Other research will focus on the equivalence between generic inhaled, topical, dermatological, nasal, ophthalmic and other generic drugs and their branded counterparts, as well as research on abuse-deterrent systems for drugs prone to abuse, which would include opioid painkillers.

The FDA also is increasing generic drug user fees for the fiscal year. For example, the fee for filing an abbreviated new drug application, or ANDA, will be $63,860, compared with $51,520 for fiscal year 2013, a 24% increase.

CVS/pharmacy’s path to personalization

Fifteen years of ExtraCare data is influencing everything from how the company builds stores to how it communicates with customers

Personalization. In a single word, it is what is at the heart of every strategic initiative and important retail program occurring at CVS Caremark today.

“The overarching thing that we’re working on, and I think is the big key to our success, is this theme of personalization,” Mark Cosby, president of CVS/pharmacy, told Drug Store News in an exclusive Sept. 20 interview. “Any of the success we’ve had in pharmacy, front store or the total company has been under the halo of personalized experience. It is the core of everything that we’re working on right now.”

Talk to any member of the CVS Caremark executive team these days about the company’s core retail strategy and how it aligns with its broader plans to grow the total enterprise (read: the continued integration of one of the nation’s largest network of stores, one of the big three PBMs and the largest retail clinic footprint), and the conversation routinely comes back to that single word: personalization.

To learn more about CVS Caremark’s personalization efforts, and how those efforts are manifesting across its entire business — from how it is training its associates throughout the company, to how it markets and communicates with its customers, how it designs and merchandises its stores, and the pharmacy programs it is using to drive patient adherence and improved health outcomes — DSN recently sat down with Cosby, as well as SVP merchandising Judy Sansone and SVP/chief marketing officer Rob Price, at the company’s headquarters in Woonsocket, R.I.

Really, it’s nothing new, they’ll tell you; this has been going on for years now — about 16 years, actually, ever since it first launched the ExtraCare loyalty program in 1997.

But that commitment has definitely been amplified recently, and is resulting in a series of new initiatives and programs that the company either has introduced recently, or plans to introduce in the coming weeks and months, including:

myCustomer — A customer service initiative that began in January with a new email-based customer survey tool, and culminated in March with the training of all 188,000 CVS store associates on the critical behaviors needed to better engage customers and deliver the best possible customer experience;

Segmentation — How the company is identifying and communicating with its best customers;

myCVS — How it is segmenting its stores into manageable clusters to match the local trade area;

Conversion — How it is engaging customers to purchase more broadly across different departments of the store;

Supplier collaboration — how a new information gateway rolled out this fall, developed with IRI, is enabling its vendors to use and plan from the same data used by CVS’ own category managers; and

myWeeklyAd — Launched just last month, the digitized circular program creates a personalized list of offers based on the actual items an ExtraCare member historically purchases.

Identifying top customers

And just as it all began with ExtraCare, today, with more than 70 million active members, the program clearly remains a central driving component of CVS Caremark’s personalization efforts. “A big piece of personalization is how we take ExtraCare to the next level,” Cosby explained.

It is no news flash that after many years of being the only loyalty program in the drug channel, competition to ExtraCare has emerged in recent years, as both Rite Aid and Walgreens have introduced programs of their own. “We have seen a greater saturation of conventional loyalty programs,” Price noted. “What it has told us is that we need to be unconventional.”

But it’s not just being different for the sake of it. “The card itself — and even the basics of a loyalty card program — is not the heart and soul of customer engagement,” he explained. “The easy part is distributing cards — we’ve distributed 327 million cards. The disbursement of plastic is not the hard part. The hard part is the personalization, and the access and the ease of use, and the insights and relevance that you build over time.”

And that is an area in which CVS Caremark executives are quite confident that their 16-year head start gives it a significant advantage. “We think that relevance is an advantage that is very hard to catch up with,” Price said. “We think of ourselves as a matchmaker, or a personal shopper, between a customer and their very best deal — that’s something you can only earn over time.”

As CVS Caremark has discovered over the years, the true beauty of its ExtraCare loyalty program — used in about 84% of total front-store sales, according to the company — is the data that helps CVS identify segments of customers in order to deliver relevant rewards to each segment.

“What has become more important is providing more personalized service to our top customers based on their healthy habits,” Price said.

CVS’ best customers concentrate in one of three areas, he explained, which the company has identified as:

Health seekers — Customers who tend to over-index in terms of managing chronic conditions and who are enthusiastic and curious about how they can take personal control of their health;

Health strugglers — Similarly struggling with chronic conditions, but these customers tend to be more uncertain about how to take control; and

Quality actives — Valuing convenience and ease of use when taking care of their acute needs. “They may not have as much presence of chronic disease in the house,” Price explained, “but as they grow older, become caregivers and perhaps develop chronic disease themselves, and begin to fall into that ‘Seeking’ or ‘Struggling’ phase, we are going to be their preferred destination.”

Why health? Because it enables a powerful alignment between its best customers’ core interests and CVS Caremark’s core strengths as a dominant force in pharmacy healthcare innovation, and its broader mission to leverage its unique three-pronged, integrated structure to help fix health care — lowering costs, increasing access and improving outcomes.

One clear example of how personalization has played out in pharmacy and health care across the CVS Caremark enterprise is the work it has done with Pharmacy Advisor; by definition, that program, which identifies gaps in therapy and adherence at the patient level, relies on a personalized intervention with the patient, Cosby explained.

CVS Caremark pharmacy teams have performed more than 100 million of these types of patient interventions through Pharmacy Advisor since the launch of the program.

Similarly, ExtraCare has evolved in design in recent years, with a growing range of opt-in programs that aim at the sweet spot of its “Seekers/ Strugglers” strategy, including the addition of ExtraCare Pharmacy and Health Rewards and the ExtraCare Advantage for Diabetes program.

For the “Actives” part of its strategy, ExtraCare has spun off fun, hip programs like Beauty Club.

While executives are reticent to discuss how these opt-in niche programs would continue to evolve ExtraCare, it is clear that CVS will continue to work closely with its best vendor partners to leverage the program and its full digital, mobile and in-store platform to further personalize down to the needs and preferences and purchasing behavior of its best customers.

Conversion — customers and the shopping experience

Fifteen years worth of ExtraCare learnings also have dramatically influenced the way CVS Caremark markets and merchandises to its best customers. These learnings have informed a critical part of its overall retail strategy, Sansone told DSN — conversion.

“What we found was we had a lot of upside with existing customers,” Sansone explained. “Conversion is the way we bring personalization to existing customers; by giving them offers that are highly relevant to them, we can really engage them across the store.”

Prior research had shown the company that customers tend to shop a limited number of categories. For example, the data revealed that pain relief customers bought hair care products only 42% of the time and oral care customers bought vitamins only 36% of the time.

The most recent example of how it is personalizing the conversation with its best customers through ExtraCare is myWeeklyAd, which soft-launched in mid-September. The digitized circular initiative enables CVS to personalize its weekly promotions down to the user based on past purchasing behavior.

“Last week we had 45 million copies of one circular,” Sansone said, during the Sept. 20 interview. “Now we can create a different digital version for every customer.”

The offers are specific to the SKU and store level, she explained, and the ads even instruct the customer where to find the items on the shelf of their local store.

The ability to create this kind of personally curated, geo-mapped shopping lists is unprecedented in loyalty programs, Price added.

Store design and manageable clusters

Another key area, in which ExtraCare is helping to personalize the shopping experience, is in the way CVS Caremark designs and merchandises its stores.

Further leveraging the insights from ExtraCare, CVS Caremark continues to evolve its myCVS store clustering initiatives, which began in 2011 with the rollout of a special store format designed for its Urban cluster stores, which feature a vastly expanded consumables offering among other key features.

By the end of 2012, the company operated 450 Urban cluster stores, with plans to have 85 more in 2013. Currently, the company also is piloting a Suburban cluster format that features an “amplified health and beauty presence,” Price explained.

These PATH stores, as the company has identified them — short for “Personalized Access to Health” — offer “a more complete assortment and a more elevated experience, with a more shop-able healthcare quadrant … both in terms of physical access and navigation, and also how it integrates into pharmacy,” he said.

CVS Caremark also is applying the insights from its store-clustering initiatives to refreshes and remodels of its existing stores, as well into its regular planogram reviews and resets.

And along the way, it also is learning that some of the insights that come out of one cluster or another are not necessarily exclusive to just those stores. “Many of these insights are generalized — or ‘cluster-agnostic,’ as we call it,” Price added. “We see a lot of promise with some of these insights being weaved into our day-to-day business.”

While the overarching strategy of store clustering might be personalization, the real goal is not to create 7,500 different variations on the store prototype. “If we had our druthers, we would individualize the stores based on visit,” Price said. “But what you can do is leverage the information, not to individualized stores but to personalized stores, and tailor those stores into manageable groups that create an affirmative answer to the question: ‘Is this store for me?’”

No doubt, 15 years worth of ExtraCare data acquisition and the degree of engagement it has had with customers, “gives us an incredibly rich pool of insights to build stores that customers are going to love,” Price added, “but it’s a journey.”

And for CVS Caremark, all roads lead back to individualizing the shopping experience for its best customers.

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